WASHINGTON: The US State Department has retained the foreign military financing (FMF) option for Pakistan but kept open the option to convert it into a loan guarantee when needed.

But the department’s budget proposals for fiscal 2018 indicate a major cut in FMF funds for Pakistan, from $255m in the current fiscal year to just $100m in 2018.

The budget proposals, released last week, include $800m of reimbursements to Pakistan for its continued military and logistical support to coalition forces in Afghanistan. But this could also be reduced to half of the proposed amount, if Congress maintained its trend of attaching conditions to these reimbursements.

Last week, the Trump administration proposed converting the FMF for Pakistan into a loan guarantee but left it to the State Department to make a final decision.

The State Department has proposed almost $535m of both economic and military assistance to Pakistan, excluding the proposed $800m reimbursements that come from the Coalition Support Fund, which is managed separately by the Department of Defence.

The proposed Economic Support and Development Fund of $200m is the same as set aside in the previous budget but it has surpassed the military component, which has been reduced from $255m to $100m.

Almost $70m are listed as investing in people and $61m of this is for education, which includes funding students who come to the United States for studies. The rest is for health projects within Pakistan. More than $63m are for encouraging economic growth.

The budget proposals conform to the trend of a gradual reduction in US assistance to Pakistan, evident since the 2011 US raid at Osama bin Laden’s compound in Abbottabad, which strained relations between the two allies.

The 2018 proposal has no conditions for disbursement of CSF to Pakistan. But the proposal now goes to Congress for approval, which can attach its own conditions.

Since 2015, Congress has gradually reduced the reimbursements by attaching $250m of reimbursements to a certification from the secretary of defence that Pakistan is effectively combating the Haqqani network.

The restricted amount increased to $400m in the previous year and the new Congress is also likely to attach at least half of the proposed $800 to a similar certification. Since 2015, the secretary has not issued this certification for Pakistan.

A Pentagon official told Dawn that the proposed reimbursements show that Washington values Pakistan’s continued military and logistical support to coalition forces in Afghanistan.

“The Department recognises the significant sacrifices the Pakistan military has made in the fight against terrorism, and appreciates Pakistan’s continued support for transit of material to coalition forces in Afghanistan,” said Adam Stump, US Defence Department’s spokesman for Afghanistan, Pakistan and Central Asia.

Justifying the proposed disbursements, the Pentagon said Pakistan has served as a key ally in operation ‘Enduring Freedom’ since 2001 and will continue to play a key role in maintaining stability in the region.

Published in Dawn, May 30th, 2017